Month: August 2023

Apache is functioning normally

On Monday I mentioned that it pays to shop around for the lowest price. This skill is specially important when making large money decisions. You should always shop around when purchasing a car, obtaining a mortage, or hiring a contractor. We’ve discussed getting the best deal on a car before. We’ve touched on mortgages, and are sure to discuss them more in the future. Today I want to share my approach to finding a contractor.

The New Roof
We bought our first house in the spring of 1993. The roof was in bad shape and needed to be replaced before we could close the deal. Fortunately, we had a good working relationship with the seller: he offered to grant us a $2,000 credit if we would take care of finding a roofer.

I had never done anything like this before, nor had any of my friends. I looked in the phone book and found a local roofer. When I called, he could sense that I was confused, so he talked me through the process, asking about the size of the house, the slope of the roof, the material we wanted to use, the condition of the existing shingles. He gave me a quote of $2300.

I called two more places. One quoted $2500 and the other quoted $1800. But the last place couldn’t do the roof repair for three weeks. Three weeks!?! I needed it done by the following weekend. This was getting complicated.

I got out a sheet of paper and made a list.

Company Cost Lead Time Notes
Johnny B. Goode $2300 5 days local guy
Golden Shingles $2500 3 days
ABC Roofing $1800 21 days no weekends

I spent my lunch-breaks during the next two days calling roofing contractors. When I was finished, I had a list of twenty bids. The lowest quote was $1200; the highest was $4800. (I’ve never figured out why that bid was so out of range.)

I had created this list on a whim, but found it invaluable. After eliminating from consideration those contractors who couldn’t meet the time-frame and those that would not offer a strong enough guarantee, I had a list to six or seven potentials. The contractor I hired did not offer the lowest price, but he:

  • ran a family business like mine
  • was willing to answer my questions
  • offered a $500 reduction if I helped on the project (he was short-handed)

Though this contractor wasn’t the cheapest, the $1800 net cost was relatively low. A friend and I spent a long weekend ripping off old shingles and nailing down new ones. It was hard work. I learned something about roofing in the process, and for the decade we lived in that house, I was filled with a sense of pride whenever I had to climb on the roof to clean the gutters.

In the summer of 2006, we had to repair a section of the roof on our current home. We didn’t call twenty contractors this time, but we did call half a dozen. Again there was wide disparity in the bids: they ranged from a low of $300 to a high of $3000. We chose a company that quoted $800, but which seemed to understand what we wanted.

The Bathroom Remodel
When we bought this house, we knew that the bathroom would have to be remodeled. It was a mess, filled with eighty years of shoddy add-ons:

  • The shower stall was huge, and dominated the room.
  • The plumbing and electrical work were not to code.
  • There was minimal lighting.
  • You could see through to the basement in one section of the floor.
 

We went to the Portland Home & Garden Show to get ideas. There we found a company whose work we loved, and invited them to bid. They gave us an estimate of $34,000. That was more than twice what we had planned to pay.

Kris found a web site that matched jobs with contractors, and it paired us with a fellow who gave us a bid of $15,000. That was exactly at our budget (probably because we had to tell the web site what our budget was), but we weren’t confident that this contractor was listening to what we wanted. He didn’t seem competent.

One of Kris’ co-workers recommended another contractor. We met with him, liked him immediately, felt he was playing fair with us, and were pleased that he could meet our timeline. He quoted us $18,000 — $21,000 if we did everything to code and got all the permits, etc. We chose the latter option.

In retrospect, we probably could have spent more time to find a lower bid. But we were pleased with the final results, and plan to hire this contractor again in the future.

Conclusion
When you shop around for groceries, you can save maybe $1 on a loaf of bread. When you shop around for a plasma television, you might save $200. But when you shop around for big-ticket items, you can save thousands of dollars.

Some people feel guilty asking a company for a price quote and then not using them. Don’t. That’s how it works. The company isn’t offended. They quote similar jobs every day. Sometimes they get the work — sometimes they don’t. Your priority is finding a company that you can trust to do the work at a reasonable rate.

When comparing prices, be sure you match apples to apples. The deal from Rock Bottom Cabinets might not be so impressive if they don’t offer any sort of guaranty on their workmanship. Consider the following when making your decision:

  • Reputation — Ask for references. Check the references. Better yet, search the web. (Angie’s List is a good source for information on contractors.)
  • Reliability — Is the company licensed and bonded? Registered with the state contractors board? Do they offer a warranty?
  • Schedule — It’s no use taking the lowest bidder if the company is unable to complete the project on your timeline.
  • Quality — Try to get a sense of the quality of each contractor’s workmanship. Those who bid on our bathroom remodel brought photo albums to show us. The low bidder didn’t.

You can also save money by doing some of the work yourself, but that’s a subject for another day!

Source: getrichslowly.org

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June 2, 2017
by Zach Festini

Even if you’re not ready to buy just yet, it pays to be prepared. Keep these 5 tricks in your back pocket—they’ll come in handy later in the homebuying process.

1. Get multiple quotes

Lenders are required to provide a loan estimate for fees and other closing costs within 3 days of receiving your application. This gives you the chance to compare lender fees, or what the lender charges for services like underwriting and processing. Use it wisely and get several quotes before settling on a lender.

2. Shop around for third party services

Once you’ve selected a lender, review the list of third party vendors in your lender’s estimate. You can’t select the appraiser, but you can find alternative title companies, settlement services, and other services that might be listed in the lender’s estimate like surveyor and pest control. Shop around and get estimates.

3. Negotiate with the seller

Most lenders allow the home seller to pay for the buyer’s closing costs—the trick is convincing the seller to pony up the cash. Often, a home inspection will turn up issues that give you more room to reopen the conversation. This is where negotiating skills and a knowledgeable realtor will come in handy.

4. Close near the end of the month.

At closing, you’ll be required to prepay interest that accrues from the closing date to the end of the month. If you close the middle of the month, you will have to pay two weeks of interest. By closing at the end of the month, you will have to pay only a few days’ worth of interest.

5. Accept a higher interest rate

If you can’t afford closing costs and the seller won’t pay, talk to your lender about getting a no­closing-cost loan. With this type of loan, you agree to a slightly higher interest rate in exchange for zero closing costs. The bank pays your closing costs and makes its money back over time thanks to the extra interest.

Filed Under: Uncategorized

Source: totalmortgage.com

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The Zillow app on a smartphone arranged in Germantown, New York, US, on Tuesday, July 25, 2023. Zillow Group Inc. is scheduled to release earnings figures on August 2.

Gabby Jones/Bloomberg

Zillow Group Inc. shares slid after the company’s revenue forecast missed estimates, with an anemic U.S. housing market weighing on expected results.

The company, whose core business is helping real estate agents connect with homebuyers, said it’s projecting third-quarter revenue of $458 million to $486 million. That compares with an average analyst estimate of $488 million in data compiled by Bloomberg. 

The shares fell as much as 7.6% in late trading. They were down 2.1% to $51.91 at 4:46 p.m. New York time.  

The disappointing forecast came on a day in which the company reported second-quarter earnings that beat analyst estimates. 

Zillow’s “residential” business segment generated $380 million in revenue in the quarter, down just 3% from the same period of 2022, when the housing market was still blazing. That compares with a 22% decline in industry transaction volumes, according to the statement.

The company’s websites and apps remained popular despite slower home sales, attracting 226 million unique users on the average month in the second quarter. Zillow said investments to its sales funnel have helped it do a better job connecting homebuyers to real estate agents.

“Zillow outperformed the broader industry for the fourth consecutive quarter as we navigate a tough real estate market,” Chief Executive Officer Rich Barton said in the statement. “I’m pleased with our steady progress on improving and integrating our customer and partner experiences, especially in touring, financing and renting.”

Source: nationalmortgagenews.com

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Yields Briefly Hit 8 Month Highs

By:
Matthew Graham

Wed, Aug 2 2023, 3:47 PM

Yields Briefly Hit 8 Month Highs

Bond yields spiked to their highest levels in more than 8 months this morning following another upbeat ADP report.  At first glance, it was a repeat of last month’s ADP reaction–not something that made perfect sense given that last month’s ADP didn’t align well with NFP 2 days later.  In today’s case, the amount of weakness attributable to ADP was much smaller than last time.  Instead, it was the bond market’s digestion of the Treasury refunding announcement that caused issues.  10yr auction sizes were a bit higher than expected and the Treasury’s buyback program was a bit lighter than expected. Longer-dated bonds took a hit while 2-3yr Treasuries actually improved.

    • ADP Employment
      • 324k vs 189k f’cast, 497k prev

08:25 AM

Modestly stronger overnight and a bit weaker after ADP. 10yr up 0.8bps at 4.045.  MBS down 2 ticks (.06).

10:23 AM

Additional weakness with 10yr up almost 6bps at 4.094.  MBS down a quarter point (occasionally half a point due to illiquidity).

01:30 PM

Nice bounce back with MBS now down only an eighth and 10yr up only 3.2bps at 4.069.

03:45 PM

Fairly flat since the PM recovery.  MBS down 7 ticks (.22) and 10yr up 3.4bps at 4.071.

 Download our mobile app to get alerts for MBS Commentary and streaming MBS and Treasury prices.

Source: mortgagenewsdaily.com

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RealtyTrac has released a new report that identifies potential bubble markets based upon three early warning signs.

There has been increased fear of another housing bubble for a while now, with some markets already identified as bubbles and others supposedly suffering from an affordability crisis.

Signs of a possible housing bubble include the following:

– A market that was less affordable in October 2014 than its peak price during the previous bubble between 2005 and 2008
– A market that was less affordable in October 2014 compared to its historical average since 2000
– A market with a rising foreclosure rate on loans originated this year compared to last year

Overall, the price of a median-priced home required 26% of median income in October in 475 counties nationwide.

This compares to a historical average of 28% going back to January 2000, and is still well below the 41% average seen in each county’s peak month during the most recent housing bubble.

In fact, just six counties were deemed less affordable in October than during their peak between 2005 and 2008, thanks in part to higher incomes and low mortgage rates.

The short list includes Suffolk County, Massachusetts, Travis County, Texas, Jefferson County, Alabama, Brazos County, Texas, Allegan County, Michigan, and Montgomery County, Tennessee.

These counties correspond to the metro areas of Boston, Austin, Birmingham, College Station, Grand Rapids, and Clarksville.

However, 21% of counties nationwide are now less affordable than their historic averages, including hot spots like Los Angeles, Orange County, San Francisco, Dallas, San Antonio, and even parts of Detroit.

Meanwhile, 37% of counties are reporting rising foreclosure rates on loans originated this year compared to last, including places like Chicago, San Diego, Brooklyn, Miami, Las Vegas, and Seattle.

And six percent (30%) of counties are both unaffordable by historic measures and experiencing rising foreclosure rates on recent loans.

This combined problem list includes places like the San Francisco metro area, Suffolk County, Orange County, Honolulu, Denver, the St. George, Utah metro area, and the Bend, Oregon metro area.

RealtyTrac vice president Daren Blomquist noted in the report that affordability and foreclosure rate by loan vintage are key metrics that help determine if a certain market is at risk of another pricing bubble.

He added that about 20% of markets have now surpassed their historical affordability norms, a “strong sign” that a bubble is forming or that appreciation will soon plateau until wages have a chance to catch up.

The fact that foreclosure rates are rising on new loans could be an indication that affordability is once again a concern as buyers stretch themselves too thin.

12% of Counties Have Reached New Home Price Peaks

In October, a total of 58 counties had higher median home prices than their prior peaks seen in 2005 to 2008.

The usual suspects made this list too, including San Fran, New York, Boston, and Denver, along with Charlotte, Raleigh, and Buffalo.

However, low interest rates are keeping homes in these highly sought-after areas affordable. But if rates rise and home prices continue to climb, the story could change in a hurry.

But nearly half (48%) of counties nationwide are still historically affordable and experiencing flat or declining foreclosure rates. So the whole nation isn’t yet at risk of another housing bubble.

The most affordable regions include Lansing, Syracuse, Cincinnati, Atlanta, and Buffalo.

There’s clearly some divergence in terms of affordability and home price peaks. Put another way, some areas of the country are experiencing new all-time highs but are still historically affordable.

The concerning thing is the unaffordable places, especially at a time when interest rates have never been lower. It doesn’t bode well for them or those at new highs, unless interest rates stay low forever.

Read more: When will the next housing crash take place?

Source: thetruthaboutmortgage.com

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For all intents and purposes, the average 30yr fixed rate at the average lender is as high as it’s been since November 2022.  The number itself as far as we see it is 7.10 which means most lenders are quoting 7.125% after adjusting for discount points (or just “points” for short).

For example, a borrower could opt to pay just over 1% of the loan balance upfront in order to drop the rate to 6.625%.  Some lenders are quoting 6.625% with that extra upfront cost.  Others are quoting 7.125% without the extra cost.  

The upward momentum in rates didn’t draw on any specific news or developments today.  Rather, markets are bracing for impact from upcoming economic data as well as tomorrow’s announcement of the latest borrowing amounts from the US Treasury.  

Treasury issuance matters because Treasuries are one of the most important determining factors for interest rates in the U.S. The more that are issued, the lower the price and the higher the yield/rate.  Analysts know the amounts will be going up and markets are nervous and uncertain about the amount of the increase. 

Once that’s resolved, and if the week’s remaining economic data paints a cooler picture for the economy, rates could easily recover.  On the other hand, if the data is upbeat and if Treasury issuance rises more than expected, the upward momentum will continue. 

Source: mortgagenewsdaily.com

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Black Knight reported slimmer profits and slowing organic growth in the second quarter, largely due to weaker mortgage volume from clients as well as near-term effects from the proposed merger deal with Intercontinental Exchange (ICE).

The company’s profit dropped 61% quarter over quarter to $55.3 million in Q2 2023. Profit rose 32% from $40.3 million in Q1 2023. 

“Our second quarter results reflect a weaker than expected mortgage market coupled with the near-term effects of the proposed merger with ICE. Revenue declined 4% on an organic basis driven by lower origination volumes as well as indirect effects of the mortgage market on our originations software business,” Black Knight CEO Joe Nackashi said in a statement.

Black Knight’s revenue in the second quarter reached $368.2 million, declining 7% from the same period in 2022.

“High interest rates following the rapid rise since early 2022 continue to cause operational challenges for Black Knight’s clients and prospects,” the company noted in its 8K filing.

Heightened focus on expenses by clients and prospects, as well as the proposed ICE transaction, has elongated the sales cycles in the short term; market conditions continue to result in elevated originator consolidation, bankruptcies and associated attrition, according to its filing with the Securities and Exchange Commission (SEC). 

Software solutions represented 87.9% of the revenues in the first quarter, with an operating margin of 41.4%, down from 45.6% in the same period of 2022. 

“Our origination software solutions revenues decreased $15.6 million, or 13%, as revenues from new clients were more than offset by a decrease of $8.3 million in license fees and the effect of lower origination volumes and attrition,” according to the company’s 10 Q filing with the SEC. 

The remaining revenue came from data and analytics, a segment with an operating margin of 15.2% from April to June, compared to 24.9% in the previous year.   

Development on ICE-Black Knight merger 

With ICE’s proposed acquisition of Black Knight under review by the Federal Trade Commission (FTC), the two companies and the FTC are expecting a preliminary injunction hearing scheduled for August 14 – August 18. 

Black Knight, ICE and the FTC asked for a delay as the planned sale of Optimal Blue in July requires time for the FTC staff to analyze the implications of the divestiture and discuss a potential resolution of the pending matter.

ICE and Black Knight also announced an agreement to sell loan origination system Empower to a subsidiary of Canada’s Constellation Software in March to quell FTC’s antitrust concerns. 

Following ICE and Black Knight’s announcement of an agreement to sell Optimal Blue, Keefe, Bruyette & Woods (KBW) noted that the divestiture of Black Knight’s Optimal Blue leaves the FTC with a weak case as it remedies the remaining horizontal overlap cited in the FTC’s complaint.

KBW had floated the possibility of the FTC settling on the ICE-BK merger deal before the August 14 trial, allowing the deal to close Q3 2023.

“As this case continues to evolve, it is not possible to reasonably estimate the probability that the parties will ultimately reach settlement or that the FTC will ultimately prevail on its claims. Should the parties not reach a settlement, we intend to vigorously defend against the claims of the FTC,” Black Knight’s 10 Q filing said. 

Due to the transaction with ICE, Black Knight has suspended the practice of providing forward-looking guidance.

Source: housingwire.com

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Saudi Arabia said Thursday it will extend its unilateral production cut of 1 million barrels of oil a day through the end of September in its effort to boost flagging energy prices, a move that could push U.S. gas prices higher.

The Saudi reduction, which began in July, comes as the other OPEC+ producers have agreed to extend earlier production cuts through next year.

The national average for U.S. gas prices stood at about $3.82 a gallon on Tuesday — about 30 cents higher than a month ago, according to motor club AAA. While today’s prices at the pump remain far lower than they were last year, when energy costs soared worldwide in the months following Russia’s invasion of Ukraine, experts say such a jump is unusual.

The kingdom announced the extension in a statement on the state-run Saudi Press Agency, quoting an anonymous official in the Energy Ministry. The official added that the cut “can be extended or deepened” if the need arises.

Mortgage rates tick higher

The average long-term U.S. mortgage rate rose again this week, bad news for Americans seeking to upgrade or buy their first home.

The average rate on the 30-year home mortgage rate ticked up to 6.90% this week from 6.81% a week ago. A year ago, the benchmark home loan rate stood at 4.99%, mortgage buyer Freddie Mac reported Thursday.

The average rate on 15-year fixed-rate mortgages, popular with those refinancing their homes, climbed to 6.25% from 6.11% last week. A year ago, it was 4.26%.

High rates can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market already overpriced for many Americans.

High inflation has driven the Federal Reserve to raise its benchmark interest rate 11 times since March 2022. Its fed funds rate has hit the highest level in 22 years.

Source: bostonherald.com

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Freddie Mac’s Primary Mortgage Market Survey, which focuses on conventional and conforming loans with a 20% down payment, shows the 30-year fixed rate averaged 6.90% as of August 3, up from last week’s 6.81%. By contrast, the 30-year fixed-rate mortgage was at 4.99% a year ago at this time. The 15-year fixed-rate mortgage also rose this week to 6.25%, up 14 basis points from the prior week.

“The combination of upbeat economic data and the U.S. government credit rating downgrade caused mortgage rates to rise this week,” said Sam Khater, Freddie Mac’s chief economist. “Despite higher rates and lower purchase demand, home prices have increased due to very low unsold inventory.”

The sudden hike of the 10-year Treasury, along with upcoming employment and inflation data, will influence how much mortgage rates may rise in the short term, economists say. If employment and inflation pick up steam, mortgage rates are likely to continue climbing as markets prepare for further monetary tightening, said Realtor.com Economic Data Analyst Hannah Jones. On the bright side, the prospect of a recession is dimming for the next six to 12 months.

Other mortgage rate indices showed mixed results on Thursday morning: 

HousingWire’s Mortgage Rates Center showed Optimal Blue’s 30-year fixed rate for conventional loans at 7.02% on Wednesday, compared to 6.85% the previous week. At Mortgage News Daily on Thursday morning,  the 30-year fixed rate for conventional loans was at 7.20%, up 25 basis points from the previous week.

The economy remains on firm footing

Regarding the housing market, new economic data further solidify the view that the economy remains on firm footing, highlighted George Ratiu, chief economist at Keeping Current Matters.

“Construction spending advanced in June, a sign that companies and the government continue investing in real estate and infrastructure projects. Meanwhile, the number of open jobs retreated slightly, but remained above 9 million, while the number of workers leaving their positions for better ones remained elevated. Many companies still deal with a shortage of labor, as evidenced by the private payroll data which outpaced market expectations,” said Ratiu in a statement. 

Look for payroll employment data tomorrow

“Tomorrow’s government report on payroll employment will add another data point to the bigger picture, with economists looking for changes in the unemployment rate and wage figures,” he added.

Meanwhile, active inventory fell compared to the previous year each week in July as many homeowners held off on listing their home for sale, noted Realtor.com Economist Jones.

“The drop in for-sale inventory was met with the typical seasonal pick-up in buyer demand, despite affordability constraints, which propped up home prices. In the second quarter of 2023, homeowner vacancy fell to a historical low of 0.7% as many homeowners stayed put and home shoppers snapped up available inventory, leaving fewer homes vacant,” she said.

This gap between supply and demand, exacerbated by a decade of under building, pushes prices up. Consequently, it also brings back market competition, especially in more affordable metro areas. Scarce inventory leads to a modest pace of sales for existing homes. On the new home front, growing options and more approachable prices have led to a pickup in sales transactions.

Lastly, Ratiu added that mortgage rates are expected to remain elevated for the next couple of months, keeping pressure on affordability. 

“For buyers who are not in a hurry, the fall and winter months could bring better values and a less competitive environment to find the right home,” Ratiu concluded.

Source: housingwire.com